Development equity fund spreads its investment wings

Chi Jianxin, president of the China-Africa Development Fund, the country's largest equity investment fund focusing on African investment, has been to 27 nations in Africa since the fund was established in 2007.

"The African economy is launching and China's similar development experience makes us believe that Africa is on the right track," Chi told China Daily.

The fund was founded after then-president Hu Jintao pledged to set it up at the Beijing summit of the Forum on China-Africa Cooperation in 2006, and it had committed more than $2.4 billion in investment to over 60 projects in 30 African countries by the end of February.

Its target is to raise $5 billion, with the initial phase of $1 billion and second phase of $2 billion being raised from the China Development Bank by the end of 2012.

The remaining $2 billion will be financed before the end of 2015, according to an announcement at the fifth ministerial conference of the Forum on China-Africa Cooperation Beijing Action Plan (2013-15).

"We invested in Africa with Chinese companies and preferred to be a minority shareholder," said Chi. "We may consider independent private equity investment there and develop new businesses of consulting and intermediary services as well as private equity."

The investment sectors of the fund are diversified, ranging from agriculture and manufacturing to infrastructure and mining.

One of the first projects covered by the fund was investing in a gas-steam power generation project in Ghana in 2008 with Shenzhen Energy Investment Co Ltd. The capacity of the first phase of the project is 200 megawatts and its total investment is about 1 billion yuan ($161 million).

When the fund secured the first phase of financing - $1 billion - for all its projects in Africa in 2007, it attempted to seek deals around the continent. When the second phase of $2 billion arrived, the fund had become highly familiar with African investment, finding many good opportunities.

One of the deals undertaken in the fund's second phase saw it combine last year with Beijing-based media group StarTimes for a $600 million digital TV investment, of which it provided $150 million.

The project provided digital TV services, including packages of up to 140 channels, for 2.21 million families in 13 African countries, with 93 percent of the 2,556 employees on the project being residents in Africa.

Another instance of cooperation saw the fund and Hainan Airline Group invest more than $30 million to set up Africa World Airline in Accra, capital of Ghana. It has two main domestic routes and is planning to open international routes to other West African countries.

Chi said Africa is full of opportunities and the African market is increasingly attracting multinational companies from Europe, the United States, Japan and South Korea.

caixiao@chinadaily.com.cn